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Increased credit card usage could aid economic growth

In a recent report to Congress, the Board of Governors of the Federal Reserve indicated that the amount of available credit under outstanding credit card lines far exceeds the aggregate of balances owed on such accounts.

The Fed reported that as of the end of 2010, individuals were only using about one quarter of the total dollar amount available on their lines under revolving credit card plans, according to BusinessInsider.com.

The hesitation Americans have to use credit cards, experts say, may be contributing to a slow economic recovery as consumer spending accounts for 70 percent of the economy. Many consumers defaulted on their credit card accounts during the national recession and a collective focus has been put on paying off that debt.

According to HIS Global Insight, Americans have brought their balances to about $790 billion, which is down $180 billion since August 2008, BusinessInsider.com reports. The ratio of non-mortgage consumer debt to disposable income has dropped to 20.7 percent, the lowest rate in 15 years.

Economists say that as the debt drops, Americans are gradually returning to credit cards.

“What we’re seeing is a return of consumers to their credit cards but a very slow one,” Gregory Daco, an economist at IHS Global Insight, said, USA Today reports. “We would like to see it go up.”

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